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Fund Name
Public Ittikal Sequel Fund (PITSEQ)
Fund Type
Capital Growth
Fund Category
Equity (Shariah-compliant)
Fund Performance
Average Total Return for the Following Years Ended
30 November 2016
Average Total
Return of PITSEQ (%)
1 Year -2.54
3 Years 2.31
5 Years 7.90
Public Ittikal Sequel Fund
Fund Performance Fund Performance
For the Financial Year Ended 30 November 2016 For the Financial Year Ended 30 November 2016
Annual Total Return for the Financial Years Ended 30 November Distribution and Unit Split
Year 2016 2015 2014 2013 2012 Financial year 2016 2015 2014
PITSEQ (%) -2.54 2.83 6.70 18.29 10.40* Date of distribution 30.11.16 30.11.15 28.11.14
* The figure shown is for period since Fund commencement (31 October 2011). Distribution per unit
Gross (sen) 0.50 0.50 1.75
The calculation of the above returns is based on computation methods of Lipper. Net (sen) 0.50 0.50 1.73
Unit split - - -
Notes:
1. Total return of the Fund is derived by this formulae: Impact on NAV Arising from Distribution (Final) for the
Asset Allocation for the Past Three Financial Years (contd) Asset Allocation for the Past Three Financial Years (contd)
As at 30 November As at 30 November
(Per Cent of Net Asset Value) (Per Cent of Net Asset Value)
2016 2015 2014 2016 2015 2014
% % % % % %
Hong Kong COLLECTIVE INVESTMENT FUNDS
Communications 3.2 2.2 1.0 Quoted
Consumer, Cyclical - 0.5 - Malaysia
Energy 0.2 0.4 - Financial 2.8 1.5 2.4
Industrial 1.5 1.7 -
Technology 0.5 - - TOTAL QUOTED COLLECTIVE
INVESTMENT FUNDS 2.8 1.5 2.4
5.4 4.8 1.0
SHARIAH-BASED PLACEMENTS
Indonesia WITH FINANCIAL INSTITUTIONS 8.2 12.0 7.2
Communications 0.4 - -
Financial - - 0.2 OTHER ASSETS & LIABILITIES 2.2 1.7 -4.7
Utilities - - 0.4
0.4 - 0.6
Korea
Communications - 0.9 -
Consumer, Cyclical 0.5 1.3 -
0.5 2.2 -
Singapore
Communications 1.4 2.3 1.7
Consumer, Non-cyclical 0.7 1.6 -
Energy 0.1 - -
Industrial - 0.2 0.6
2.2 4.1 2.3
Taiwan
Technology 0.5 1.3 -
Thailand
Energy - 0.3 -
Industrial 0.2 - -
0.2 0.3 -
United States
Communications 1.1 1.6 -
Consumer, Non-cyclical - 0.1 -
Technology 1.2 0.2 0.4
2.3 1.9 0.4
TOTAL QUOTED EQUITY
SECURITIES 86.8 84.8 95.1
Performance of PITSEQ
from 30 November 2011 to 30 November 2016
60%
PITSEQ FBMS
45%
15%
0%
-15%
2011 2012 2013 2014 2015 2016
The FTSE Bursa Malaysia EMAS Shariah Index (FBMS) is the selected
Benchmark for PITSEQ as it is a free float adjusted capitalisation-weighted
index which comprises constituents of the FTSE Bursa Malaysia EMAS Index,
which have been designated as Shariah-compliant securities by the Shariah
Advisory Council of the Securities Commission Malaysia.
Effect of Distribution Reinvestment on Portfolio Exposures The Fund commenced the financial year under review with a Shariah-
compliant equity exposure of 84.9% and its Shariah-compliant equity
30-Nov-16 exposure was increased to above 90% in December 2015 to capitalise on
Before Distribution After Distribution Shariah-compliant investment opportunities in the domestic and regional
Reinvestment* Reinvestment* markets. The Funds Shariah-compliant equity weight was reduced to below
Shariah-compliant Equities 89.6% 88.1% 85% in April 2016 to weather the consolidation phase in the domestic and
Islamic Money Market 10.4% 11.9% regional markets. The Fund subsequently increase its Shariah-compliant
equity weight and ended the financial year under review with a Shariah-
* Assumes full reinvestment. compliant equity exposure of 88.1%. Based on an average Shariah-compliant
equity exposure of 88.11%, the Shariah-compliant equity portfolio is deemed
Change in Portfolio Exposures from 30-Nov-15 to 30-Nov-16 to have registered a return of -1.06% to the Fund as a whole for the financial
Average year under review. A full review of the performance of the equity markets is
30-Nov-15 30-Nov-16 Change Exposure tabled in the following sections.
Subsequently, the FBMS Index rose in July 2016 amid buoyant global markets Regional markets, namely the Taiwan, Indonesia, Australia, Thailand,
and the unexpected move by Bank Negara Malaysia (BNM) to reduce the Singapore, Hong Kong and Korea markets registered returns of +21.03%,
Overnight Policy Rate (OPR) by 25 basis points (bps). The Index continued to +20.47%, +16.00%, +13.13%, +2.49%, +2.40% and -8.11% (in Ringgit terms)
rise in August 2016 amid higher oil prices and firmer regional markets to touch respectively for the financial year under review.
a high of 12,596.80 points in mid-August. The Index subsequently eased on
the back of lacklustre global sentiment and weak corporate earnings for the Commencing the financial year under review at 156.78 points, the U.S. equity
second quarter of 2016. Profit-taking activities continued in September 2016 market, as proxied by the S&P U.S. Shariah Index, traded range-bound in
and the market remained in a tight trading range in October 2016. Investor December 2015 following a hike in U.S. interest rates in nearly a decade. The
sentiment turned cautious ahead of the U.S. presidential election in November Index declined sharply in January 2016 in tandem with the overall decline in
2016. Despite the initial concerns over a Trump presidency, Donald Trumps global markets on renewed concerns over Chinas slowing economic growth
victory sent the U.S. market to a rally on expectations that the president-elect and sustained low oil prices.
will deliver on his pledges of fiscal stimulus and deregulations of the financial
market. For the Malaysia market, foreign fund outflow continued in November The Index traded range-bound in February 2016 despite additional stimulus
2016 amid anticipation of a rising interest rate environment in the U.S. going measures undertaken by the Chinese government to alleviate a slowdown
forward. The FBMS Index closed at 11,901.19 points and registered a decline in the economy. The Index remained flat in March and April 2016 as weak
of 4.84% for the financial year under review. first-quarter corporate earnings did little to improve sentiment. In June 2016,
the Index traded range-bound as the U.S. Federal Reserves decision to
keep interest rates unchanged was within market expectations. The Index
FTSE Bursa Malaysia EMAS Shariah Index
subsequently advanced in July 2016 amid expectations of further delay in
(30 November 2015 - 30 November 2016)
13,000
Federal funds rate hikes and more loosening policies by central banks around
the world due to concerns over a slowing global economy.
12,750
The S&P U.S. Shariah Index traded range-bound through August 2016 but
12,500 declined ahead of two key central bank meetings in the U.S. and Japan
in September 2016. Despite a more hawkish statement from the Federal
Index
12,250
Open Market Committee (FOMC) meeting, the U.S. Federal Reserve again
12,000
opted to keep interest rate hikes on hold. This resulted in a mild rebound in
the U.S. market led by interest rate-sensitive sectors such as utilities and
11,750 telecommunication services.
11,500 The Index eased in mid-October 2016 following lacklustre corporate results
Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16
but remained flat through the end of the month amid mixed economic data.
The Index subsequently rose in November 2016 as the market rallied
The regional equity markets, as proxied by the S&P Shariah BMI Asia Ex- following Donald Trumps presidential victory, bolstered by his pledges of
Japan (S&P SAEJ) Index, commenced the financial year under review at increased fiscal stimulus and deregulations. The S&P U.S. Shariah Index
82.51 points. The S&P SAEJ Index eased in December 2015 following a closed at 162.25 points in November 2016 to register an increase of 3.49%
hike in U.S. interest rates on the back of stronger-than-expected U.S. job (+8.64% in Ringgit terms) for the financial year under review.
market data.
Islamic Money Market Review
The Index continued to retrace until mid-January 2016 in tandem with lower
oil prices. The S&P SAEJ Index subsequently rebounded in February and The 1M-IIMMR eased from 3.58% to 3.49%, averaging at 3.52% during the
March 2016 on the back of the European Central Bank (ECB)s rate cut financial year under review following the 25 bps cut in OPR.
and expectations that the increase in U.S. interest rates would be delayed.
The Index traded range-bound in April and May 2016 as the U.S. Federal Economic Review
Reserves decision to keep interest rates unchanged was within market
expectations. Malaysias GDP growth moderated from 5.0% in 2015 to 4.2% in the first three
quarters of 2016 on the back of slower investment spending and exports.
The S&P SAEJ Index rallied in the third quarter of 2016 on improving Growth in the services sector rose from 5.1% in 2015 to 5.6% in the first
economic momentum in China and expectations of further delays in U.S. three quarters of 2016. Meanwhile, the pace of construction sector activities
interest rate hikes. Regional markets retraced marginally in October 2016 was sustained at 8.2% over the same period.
on concerns over the Chinese Renminbi weakness. The unexpected result
of the U.S. Presidential Election led to further consolidation in most regional
markets as funds flowed back to developed markets. The S&P SAEJ Index
closed at 84.59 points to register an increase of 2.52% (+7.38% in Ringgit
terms) for the financial year under review.
South Koreas GDP growth rose from 2.6% in 2015 to 2.9% in the first three
Malaysias Annual GDP Growth quarters of 2016 on the back of higher domestic demand. Taiwans GDP
7.0 growth increased from 0.7% in 2015 to 1.0% in the first three quarters of
6.0 2016 amid higher public spending and export growth.
6.0 5.5
5.3
5.0 Australias GDP growth accelerated from 2.4% in 2015 to 3.1% in 1H 2016
5.0 4.7
4.1 4.2 due to higher consumer spending and export growth.
4.0
% On the international front, U.S. GDP growth eased from 2.6% in 2015 to 1.5%
3.0 in the first three quarters of 2016 amid slower consumer and investment
spending. Consumer spending growth moderated from 3.2% to 2.6% over
2.0
the same period. Meanwhile, investment spending contracted by 2.2% in
1.0 the first three quarters of 2016 compared to a growth of 5.0% in 2015 due
to lower investment in the industrial sector.
0.0
2011 2012 2013 2014 2015 2016F 2017F
At the FOMC meeting in mid-December 2015, the U.S. Federal Reserve
Source: Bloomberg raised the Federal funds rate for the first time in nearly a decade to a target
range of 0.25%-0.50% from 0.00%-0.25% previously. At the FOMC meeting in
Following a growth of 1.6% in 2015, Malaysias export growth moderated to November 2016, the Federal Reserve kept the Federal funds rate unchanged
0.5% in the first nine months of 2016 mainly due to slower exports of electrical at a range of 0.25%-0.50%. Based on the FOMC participants projections,
and electronic products. Import growth rose to 0.7% in the first nine months the Federal funds rate may be raised by 25 bps before the end of the year.
of 2016 from 0.4% in 2015. Malaysias cumulative trade surplus narrowed to
The Eurozones GDP growth eased from 1.9% in 2015 to 1.7% in the first
RM59.8 billion in the first nine months of 2016 compared to RM60.9 billion
three quarters of 2016 amid slower export growth. At its monetary policy
in the same period last year. Due to capital inflows, Malaysias foreign
meeting held on 10 March 2016, the ECB reduced its main refinancing rate
reserves increased to US$97.8 billion as at end of October 2016 compared
by 5 bps to 0.00% while the deposit rate was reduced by 10 bps to -0.40%.
to US$94.0 billion a year ago.
The ECB also increased the pace of its asset-buying program from 60 billion
Malaysias inflation rate was sustained at 2.1% in the first ten months of 2016 to 80 billion with effect from April 2016 to improve the regions economic
compared to a similar rate in 2015 as firmer food prices were offset by lower recovery and combat deflation.
transportation costs. BNM reduced the OPR by 25 bps to 3.00% in July 2016 In a referendum held on 23 June 2016, British voters voted in favour of exiting
for the first time in seven years, on concerns that uncertainties in the global the European Union (EU). Upon the United Kingdom (U.K.) governments
environment could dampen Malaysias growth. Loans growth moderated to formal notification of an exit from the EU, the U.K. has a two-year period to
5.7% in the first ten months of 2016 from 9.0% in 2015 on lower demand negotiate new trade treaties with the EU.
from the household sector.
Due to lower revenue and increased government spending, the Federal Outlook and Investment Strategy
governments budget deficit in the first three quarters of 2016 rose to After closing on a mixed note in 2015, global and regional equity markets
RM34.5 billion (3.8% of GDP) from RM20.3 billion (2.4% of GDP) in the first generally trended lower in the first two months of 2016 amid continued
three quarters of 2015. The budget deficit in the first three quarters of 2016 concerns over the global economic outlook for 2016, continued weakness
has exceeded the 2016 target of 3.1% of GDP projected by the Ministry of in Chinese manufacturing output and the Yuans depreciation. Global and
Finance (MOF). regional markets rebounded in March 2016 amid firmer energy prices but
subsequently traded on a mixed note in 2Q 2016 on the back of renewed
On the regional front, Singapores GDP growth eased from 2.0% in 2015
global economic concerns and the potential impact of Brexit on the European
to 1.7% in the first three quarters of 2016 amid slower growth in services
economy.
activities. Indonesias economic growth inched up from 4.8% in 2015 to
5.0% in the first three quarters of 2016 on the back of resilient consumer Global and regional markets generally closed higher in 3Q 2016 amid
spending. Meanwhile, Thailands GDP growth gained pace from 2.8% in 2015 expectations of fresh monetary and fiscal easing around the world following
to 3.3% in the first three quarters of 2016 amid higher consumer spending the Brexit outcome. However, renewed concerns over the timing of the
and export growth. Federal funds rate hikes weighed on global markets in October 2016.
Following the U.S. election on 8 November 2016, global markets generally
In North Asia, Chinas GDP growth slowed from 6.9% in 2015 to 6.7% in the trended higher on optimism that the U.S. economy will benefit from the fiscal
first three quarters of 2016 amid a moderation in the services sector. Hong stimulus policies of the new U.S. administration.
Kongs GDP growth moderated from 2.4% in 2015 to 1.4% in the first three
quarters of 2016 due to lower consumer and investment spending. Looking ahead, the performance of equity markets will depend on the
economic growth momentum in the U.S., Europe and Asia Pacific region.
U.S. economic growth is projected to gain pace from 1.6% in 2016 to 2.2% At the end of the financial year under review, South-East Asian markets were
in 2017 amid a recovery in investment spending. generally trading at a premium while North Asian markets were generally
trading at a discount to their historical averages following their respective
In the Eurozone, economic growth is envisaged to ease from 1.6% in 2016
performances over the same period.
to 1.3% in 2017 amid the potential impact of Brexit on various Eurozone
economies. Given the above factors, the Fund will continue to rebalance its investment
portfolio accordingly with the objective of achieving capital growth over the
Australias economic growth is expected to edge down from 2.9% in 2016 to
medium to long term period by investing in a portfolio of investments that
2.8% in 2017 as public spending and exports are projected to grow at a slower
complies with Shariah principles.
pace. The financial and insurance services sector should maintain its current
growth trajectory as low interest rates continue to underpin housing demand. Notes: Q = Quarter
In North Asia, Chinas GDP growth is estimated to ease from 6.7% in 2016 H = Half
to 6.4% in 2017 as economic growth continues to moderate. Meanwhile,
Policy on Soft Commissions
Chinas inflation rate is projected to inch up from 2.0% in 2016 to 2.1% in
2017 due to higher food prices. The Chinese central bank has the flexibility The management company may receive goods or services which include
to further cut the one-year lending rate to support domestic demand. In research materials, data and quotation services and investment related
addition, the Chinese government may unveil more stimulus measures such publications by way of soft commissions provided they are of demonstrable
as further fiscal spending in the event the economy grows at a weaker-than- benefit to the Fund and unitholders.
expected pace.
During the financial year under review, PITSEQ has received data and
Hong Kongs GDP growth is projected to gain pace from 1.3% in 2016 to quotation services by way of soft commissions. These services were used
1.7% in 2017 amid a moderate firming of domestic demand. Going forward, to provide financial data on securities and price quotation information to the
the Hong Kong government is anticipated to maintain its existing tightening Fund Manager during the financial year under review.
stance on the residential property market. However, ample liquidity, demand
for better living standards and resilient economic growth will lend support to
Hong Kongs property market over the long term.
South Koreas GDP growth is envisaged to ease from 2.7% in 2016 to 2.6%
in 2017 due to slower domestic demand. Meanwhile, Taiwans GDP growth
is projected to strengthen from 1.0% in 2016 to 1.8% in 2017 as exports and
investment spending are envisaged to recover.
In South-East Asia, Singapores GDP growth is projected to firm from 1.6%
in 2016 to 1.9% in 2017 as fiscal spending and corporate tax rebates should
lend support to domestic demand. Indonesias GDP growth is expected to
expand from 5.0% in 2016 to 5.3% in 2017 amid sustained growth in domestic
demand. Meanwhile, Thailands GDP growth is envisaged to inch up from
3.1% in 2016 to 3.2% in 2017 on the back of stable domestic demand.
Malaysias GDP growth is expected to edge up from 4.1% in 2016 to 4.2%
in 2017 amid an anticipated strengthening of domestic demand. This will be
supported by sustained consumer and investment spending amid government
measures to increase disposable incomes and the ongoing implementation
of infrastructure projects.
The budget deficit is projected to widen to RM40.3 billion (3.0% of GDP) in
2017 from RM38.7 billion (3.1% of GDP) estimated for 2016 with revenue
expanding by 3.4% to RM219.7 billion. Meanwhile, operating expenditure and
net development expenditure will see a growth of 3.7% to RM214.8 billion
and 2.4% to RM45.3 billion in 2017 respectively.
At the end of November 2016, the local stock market was trading at a
prospective P/E ratio of 16.3x, which is above its 10-year average P/E ratio
of 15.9x. The markets dividend yield of 3.18% is above the 12-Month fixed
deposit rate of 3.11%.
NAV per unit, ex-distribution (in sen) 28.66 29.92 Net (loss)/income before taxation (51,733) 10,746
Taxation (390) (464)
Net (loss)/income after taxation (52,123) 10,282
Net (loss)/income after taxation is
made up as follows:
Realised 41,390 12,539
Unrealised (93,513) (2,257)
(52,123) 10,282